Cloud Computing Michael Davis 2008 Aug17

Management Briefing: Cloud Computing - An Emerging Technology Michael Davis August 17, 2008 BUS552M Technology and Adaptive Systems Professor Benn Konsynski

Cloud Computing - An Emerging Technology IDENTIFICATION AND DEFINITION OF THE TECHNOLOGY Many consider April 7, 1969 as the symbolic birth of the internet or December 1974, when the internet name was adopted as significant dates for the internet. An often overlooked date is March 1991, when the restriction for commercial internet use was lifted. This date was followed by many significant event and technological introductions for the internet, like Tim Berners Lee release of the World Wide Web, but the act of allowing commerce transformed the access, usage, and ubiquity of the internet is responsible for face of the current internet. The internet has reshaped many important aspects of our daily lives including how we are informed, entertained, educated, and communicate, and perform work. The internet and e-commerce has changed the business models for many industries like music and film, but also ushered in the demise of others like newspaper industry. The explosive growth of e-commerce is a business driver requiring successful companies to have an adaptive enterprise, to innovate, and to deploy application services to the market faster and cheaper than the traditional corporation information technology (IT) shop. The internet as a deployment platform represents a significant paradigm shift from the traditional way businesses procure, plan, and deploy a new application, infrastructure, or service. The ability to rapidly deploy internet based services is no longer a competitive advantage, but a survival requirement to keep pace with the competition. The traditional IT structure and model is not competitive for innovation because of the amount of resources required to maintain existing technology and significant associated costs. Darryl Plummer, managing Vice President of Gartner Consulting, estimates “…about $8 out of every $10 spent on technology in corporations is for maintaining systems, rather than innovating.” i The internet free (no cost) and data access everywhere culture established conditions where a new technology with a cheaper utility cost model for providing delivery of IT services over the internet accessed via a browser could emerge. The services shift from the IT shop data center to the internet is logical considering the soaring deployment and ongoing new product and services maintenance costs (innovation), the lack of speed to market with innovation, and the lost innovation opportunities due to up front costs. The four factors which facilitated convergence helping to usher the emergence delivery of computing over the internet are computing homogenization, cheaper and increased penetration of broadband, computing economies of scale, and shared data center resources. Cloud computing is a not a new advancement or technology conceived in an advanced technology lab in Silicon Valley, but a rather a concept combining several proven concepts and extends and leverages existing models and technologies. Andres Mendes, CIO of Special Olympics view is “Cloud computing is the logical corollary of what happened in computing over the last 30 years. In a sense, it’s a return to the past; time-sharing on steroids.”ii While others describe Cloud computing as a new technology and others describe it as shrink wrapped utility or pay-as-you-use computing services. The buzz around Cloud computing is growing, as well as its use and momentum towards mainstream adoption. The optimistic future potential for Cloud computing is that like the internet it’s impact will be revolutionary. Michael Davis 1

Cloud Computing - An Emerging Technology EXPLANATION AND PROFILE OF THE TECHNOLOGY So, what exactly is Cloud computing? Gartner defines Cloud computing “as a style of computing where massively scalable IT-enabled capabilities are delivered “as a service’ to external customers using internet technologies.”iii Cloud computing provides the user a way to access their data and applications anywhere via the internet, where the user does not know where the service nor there data is hosted. As the applications are accessed through an internet browser; the software is no longer installed on the user or client computer which eliminates the user responsibility for upgrading or patching software. The Cloud applications are hosted outside of the enterprise in a private data center by a Cloud service provider. References for a video or white papers on Cloud computing are at the end of the document. A key aspect of Cloud computing is introducing a service based usage model rather than the conventional purchase cost model. Cloud computing utilizes ‘metered’ or “pay- as-you-use” approach like public utilities (i.e. electricity, water, or gas) for software, storage and platform delivery completely from internet without any initial or upfront technology investment. These cost models are referred to as Software as a Service (SaaS), Storage as a Service (SaaS), and Platform as a Service (PaaS). The Cloud user has the ability to leverage seemingly “infinite” and elastic processing resources of clustered, networked, loosely-coupled servers to provide the IT services. So, what is in the Cloud? The cloud is comprised of a collection of seven multi-layered components: applications, hardware, infrastructure, platform, services, storage, and standards. The table below provides a description for the Cloud computing components. Component Description Applications Eliminates need to install and run applications on the users computer Hardware Designed and rely upon cloud services for application delivery Infrastructure Delivery of infrastructure virtualization as a service without Platforms Facilitate application deployment Services Support interoperable network machine-to machine interaction Storage Provides storage as a service billed on a utility basis Standards Open standards Cloud computing is several years from mainstream adoption, but is rapidly gaining momentum with early adopters, installations, and users. Several of the key advantages driving adoption include; reduced infrastructure investment and service costs, faster deployment without capital expenses, and reduced service costs because of a simplified IT infrastructure. Cloud computing provides efficiencies where seemingly ‘infinite’ or “on demand” capacity is available for demand spikes and processing capabilities are provided for scalability needs for rapid transaction growth eliminating the delays associated with the normal technology procurement process. Michael Davis 2

Cloud Computing - An Emerging Technology Despite, all of the predictions about the future of Cloud computing, the main disadvantages are the risks associated with internet reliability, security, data privacy, application latency and the financial stability of many Cloud service providers. Improvements will be needed in many of these areas for many corporate organizations to seriously consider moving mission critical applications into the Cloud. RECENT APPLICATIONS Cloud computing is in commercial use, so there are a myriad of popular applications that are used on a daily basis. Examples of these applications include e-mail (i.e. Gmail, Yahoo), wordpress.com, search engines, Wikipedia, Facebook, Myspace, and Flickr. Providers are actively developing new products designed for the cloud. Likewise, product and application providers of existing user applications are creating Cloud versions of their products which can be sold through a pay-as-you-use model. For example, Microsoft is creating online versions for all of their products (i.e. Office Communications Online, Exchange Online, CRM Online and SharePoint Online). Some of the recent Cloud applications include a variety of different products types. Amazon has introduced Elastic Cloud Computing (EC2) which is a web service that provides rapid scalability in the cloud and makes web scale computing easy for developers. The Hewlett Packard (HP) Idea lab has released CloudPrint, a free product, which allows the user to print email attachments, data, or web pages from a mobile device. A company called, CherryPal, has introduced a $250 Linux based computer without moving parts and only two watts of power accompanied by a free Cloud Computing subscription. Google recently announced the capability to provide top quality site search results for any website through the cloud computing model. IDENTIFICATION OF MAJOR PLAYERS AND USERS There are more than a handful of major players ranging from startups, online vendors, to technology giants that are making significant impact in the Cloud computing arena. The following major online players that are pushing the Cloud computing emergence: Provider Product and Users/Customers A provider of application performance services that improve edge performance by moving cloud applications closer to target users. Users/Customers: Cloud providers, individual users A provider of virtualized Cloud infrastructure services; Amazon Web Services (AWS), Simple Storage Service (S3) {file storage} and Elastic Compute Cloud (EC2) {resizable cloud compute capacity} Users/Customers: Cloud providers, businesses, individual users A provider of online and mobile application products, tools, and suites. Partnering with IBM and universities to build a worldwide Cloud computing network. Users/Customers: individual users, business, university students Michael Davis 3

Cloud Computing - An Emerging Technology Provider Product and Users/Customers The provider of the first online CRM application encompassing sales force automation, marketing automation, and customer service and support. Users/Customers: Small and large business The provider AppLogic, a grid operating system (infrastructure) than runs on commodity servers connected via Gigabit Ethernet. Users/Customers: BT, Nexplore, Woopra. A provider of software products. Cloud computing consortium focused on research and education to advance the development of technologies, and infrastructure. Users/Customers: Cloud providers, individual users At an increasing rate, the number of new vendors making investments in Cloud computing as a technology. The following vendors have made significant investments pushing the Cloud computing emergence are the following: Provider Product and Users/Customers In July 2008, Hewlett Packard, Intel, and Yahoo announced a Cloud computing partnership focused on research and education to advance the development of technologies for Cloud computing. The vendor consortium is a global, multi-data center, open-source effort designed to promote research on software, data center management and hardware for large-scale, internet-hosted computing. The consortium is projecting the work will accelerate the speed of technological breakthroughs that will facilitate faster and more powerful Cloud computing products and services at a lower price point. The consortium plans to invite non- founding members to participate in the test bed. IBM and Google have formed a partnership to work with several major universities in building a world wide network of servers for consumers and businesses. Respectively, IBM and Google have announced the investment of $360 million and $600 million on new data centers to deliver cloud computing services. The Cloud computing users can be divided into the categories of individuals, small/medium business, and large business. The largest user of Cloud computing are the individuals who utilize the applications and products for leisure and work purposes. The second largest user is small to medium business. Small to medium businesses have limited infrastructure budgets and choose Cloud computing because of the low usage costs, ease to maintain, and deployment speed. The percentage of medium size companies using Cloud services has doubled since 2004. The large business group is not currently a production or real time user, but rather is experimenting with web services in the form of prototypes and evaluating Cloud computing while they wait for the technology to provide mission critical class delivery requirements and fundamental. Michael Davis 4

Cloud Computing - An Emerging Technology ASSESSMENT OF LIMITATIONS AND POTENTIAL Limitations: For the many large companies, there is a hesitancy to utilize the services or to trust that Cloud computing has the maturity provided with existing technologies. The biggest and perhaps largest limitation is the availability of the cloud or internet itself as an uncontrolled network. The availability challenge for Cloud providers is how to quickly mitigate the risk of external problems like flood, fire, and weather disaster impacting availability and how quickly the application and the data (consistent and complete) is available for online transaction processing. In simplest terms, if you loose the internet connection, you lose the application. A closely coupled issue is failover capability or the ability of the network to be configured so that it can be tolerant or resilient from single or multiple component failures without interrupting user access to the application or data. The Cloud providers will have to provide large companies with guarantees in the form of service level agreements (SLA) with significant financial penalties if availability goals are not met. Amazon’s S3 six-hour outage on July 20, 2008 is a highly visible example of the availability challenge. Similar to SLA for availability, an SLA for response time will be needed to handle the limitation of application latency. Application latency or maintaining acceptable user response time is a challenge with conventional IT operations with the existing infrastructure. Moving to the cloud where demand spikes and exponential growth are realities and the challenge of maintaining application response times will be more of a problematic issue. The loss of control associated with Cloud computing is a small issue from a practice sense, but will be difficult issue from IT culture perspective and a limitation. The IT world is conditioned that the user owns their data and not to easily trust anyone with it. Under Cloud computing, the users relinquish all control over the data and the location of the data. The user data many be any in any location globally where potential considerations local country laws, protections, and standards compliance may exist. In addition to the lack of control are concerns regarding security. There isn’t a definitive security standard, approach, or methodology for Cloud computing which is problematic as the application and data are outside of the firewall. The data privacy issue for the cloud provider data can keep track of or manipulate personal and proscribed information is a significant issue based upon the large amount of hacking on the internet. Michael Davis 5

Cloud Computing - An Emerging Technology Potential: The sky is the limit for the potential of Cloud computing. Cloud computing has already arrived for individuals small to medium business users. For example, the amount of medium sized businesses, companies with 100 to 999 employees, using Cloud services has doubled to 31% since 2004.iv There are five factors that helped to advance the emergence of Cloud computing, but the most important factor is cost or the reduced costs via the utility computing model. The elimination of up front investment in hardware and reduced service and maintenance costs reduced total cost of ownership is driving adoption. For example, the enterprise version of Google Apps costs $50 per user per year, while a license of Microsoft Office Professional retails for $499.99.v Second, the deployment speed with Cloud computing eliminates the new project IT shop backlog and provides the ability to develop and deploy in weeks to keep pace with the market and competition. Third, Cloud computing provides the ability to scale server and storage resources with growth, but also elasticity to provide the processing resources based upon spike or special demand. Fourth, the major investments of online and traditional technology providers in research and development will create breakthrough technologies and lower costs and create Cloud computing networks to propel the mainstream adoption of the technology. Last, the evolving ubiquitous bandwidth, acceptance, and usage of the internet and browsers globally as par of our lives BRIEF HISTORY OF THE EVOLUTION OF THE TECHNOLOGY It has been seventeen years since the National Science Foundation lifted the restriction on the commercial internet use in March 1991 and Cloud computing promises to be the full actualization from that decision. Cloud computing is combination of proven concepts to extend existing models and technologies wrapped up as an overall service offered to consumers with usage and pricing models that radically change the economics for technology deployment and operation. The service philosophy enabled the vision to package a viable outsource service model on the internet with an excellent value proposition. The service orientation led way to adopting the cost model from utility computing. The evolution in cost and economics has strengthened the service based value proposition. The computing economics related to cost have dropped (aided by the continued applicability of Moore’s Law) leading to a homogenization of computing or cheaper hardware. The application of distributed computing economics where it is cheaper from a network traffic perspective to locate the processing power as close possible to the data has improved Cloud computing. The price of broadband access has dropped by 50% since the late 1990’s coupled with the doubling of the penetration rate to the household. Michael Davis 6

Cloud Computing - An Emerging Technology In the 1990’s, a distributed processing technique known as “the grid” where loosely – coupled computers composed in clusters provide a largely powerful virtual computer was developed for heavy CPU intensive scientific, mathematical, and academic calculations and problems. The approach provided insight into a technique and a cost effective way to provide “on demand” resources required for Cloud computing. The emergence of new programming models and applications designed to run in the cloud along with new models for sharing data resources providing higher server utilizations, but lower application support costs. The continual evolution of web applications, communities, and hosting services on Web 2.0 provide more experience and expertise will continue to aid the maturity of Cloud computing. HOW SHOULD ONE DECIDE WHEN TO ADOPT AND HOW TO EMPLOY THE TECHNOLOGY? HP as a company has already fully embraced and is implementing a plan to employ the technology. HP as a company has a leadership position in July 2008 as a founding member of a Cloud computing consortium with Intel and Yahoo. The consortium focused on research and education to advance the development of Cloud computing technologies to act as a catalyst for mainstream adoption. Bringing to bear the resources and processes for research and development that invest $3 billion annually to Cloud computing is the best position choice as the new technology moves matures towards mainstream adoption. Significant opportunities exist for HP for leadership in several areas within Cloud computing industry. As a leading technology provider in hardware, services, and storage, HP could make a strategic investments or merger or acquisitions play for companies that are providers in the areas of hardware, infrastructure, platforms, services, or storage. With the future benefits of the pending EDS merger, HP could develop an outsourcing line of business focused on providing Cloud computing data center management, services, and deployment. HP can introduce HP branded servers and storage as part of the hardware solution. The decision for when technology providers should move the business applications and how to employ Cloud computing is dependent upon the computing classification of whether the computing is mission critical requiring 24x7 accessibility versus non mission critical computing where the applications are tolerant of short periods of offline time. Applications that are classified as non mission critical computing like document management, analysis applications, and productivity tools are the first candidates for adoption and Cloud implementation. Michael Davis 7

Cloud Computing - An Emerging Technology If the application requirements are SLA based availability, failover capability, data integrity, security and compliance like a mission critical application they should not be adopted (should be kept behind the firewall) because the Cloud computing does not provide high levels of these services. There have been several high profile recent service outages including Amazon’s six hour S3 outage on July 20, 2008 which are clear examples of why Cloud computing is not ready for mission critical computing application. A mission critical application is to explore the benefit of initiating the work of making their applications cloud enabled. An insight from David Cearley, a VP and fellow at Gartner into the adoption thought process below. “Placing limits on the use of cloud technology is a subtle issue that companies have to examine closely, measuring the risk against when and where Cloud computing can be effective. For example, by giving up some control over the data, companies get in exchange costs economies. IT, along with other C-level executives, must decide if that trade-offs is worthwhile. Cearley continues “everything will eventually be available as a cloud service- but any individual business, not everything will be accessed from the cloud.”vi Reference the other comments on the adoption and leverage of the technology at the end of this document for white papers on Cloud computing decision making and adoption plans. FUTURE DEVELOPMENT AND EXPECTATIONS Gartner has identified Cloud computing as a Technology Trigger that is two to five years from mainstream adoption as depicted on the 2008 Hype Cycle for Emerging Technologies chart below. Michael Davis 8

Cloud Computing - An Emerging Technology The promise of Cloud computing will quickly take over the mobile device and the desktop space for non mission critical applications. The migration of small and medium size business of non mission critical applications to Cloud computing has already begun, but the adoption by large businesses will be very slow. When matures, Cloud will provide improved reliability with service level agreements, improved security, and data privacy. At this point, the large businesses outsourcing customers will be more willing to consider becoming amongst the first to migrate mission critical applications to private data centers and into the cloud. The promise of Cloud computing will be the movement of application from the corporate IT shop and the transform the identity and scope. The future is bright for Cloud computing based upon a number of collaborative and independent initiatives by strategic players. The investment made by the HP, Intel, and Yahoo consortium in research and development promises to accelerate technological breakthroughs that will facilitate faster and more powerful Cloud computing products and services at a lower price point. IBM, Google, and university systems are jointly building a global network of servers for consumers and businesses to establish the infrastructure to potentially increase the reliability and availability of the Cloud. Weekly, the news of more and more major companies making investments in the technology, infrastructure, and various other elements which will rapidly drive the maturity of the Cloud computing. The potential winners will be users, providers, and vendors as the power, flexibility, and low cost of the internet will be more fully exploited. Gartner Group’s John Willis states, “However you define it, I think Cloud technology will have a footprint in every business that does IT within the next five years.”vii OTHER COMMENTS ON THE ADOPTION AND LEVERAGE OF THE TECHNOLOGY The following provides sources for additional information on the Cloud computing and leveraging the technology. • A video “What is Cloud Computing?” – Technology leaders attending Web 2.0 Expo provide their opinions created by Dan Farber, Editor and Chief at CNET is available at (http://www.youtube.com/watch?v=6PNuQHUiV3Q). • A white paper “Is Cloud Computing Ready For The Enterprise? Not Yet, But This Disruptive Innovation Is Maturing Fast” by James Staten is available at www.forrester.com. • A white paper “Sunny Days Cloud Computing” authored by Dan Kusnetsky is available at http://securitypark.bitpipe.com/detail/RES/1217439232_370.html Michael Davis 9

Cloud Computing - An Emerging Technology REFERENCES www.businessweek.com www.cio.com www.gizmodo.com www.hp.com/idealab/us/en/ www.informationweek.com www.pcmagazine.com www.wikipedia.org Brandl, Dennis “Manufacturing in the Clouds” Control Engineering, July 2008 p 28 Brandon, John “Living in the Cloud” PC Magazine, July 28, 2008 Brandon, John “What does Cloud Computing Mean for You” PC Magazine, June 23, 2008 Claburn, Thomas, “Amazon’s S3 Cloud Service Turns Into A Puff Of Smoke” Information Week, July 28, 2008 Hoover, J. Nicholas, “Amid Data Center Land Grab, Microsoft Plows Into Iowa” Information Week, August 4, 2008 King, Rachel, “How Cloud computing is Changing the World” Business Week, August 4, 2008 King, Rachel, “Cloud Computing: Small Companies Take Flight” Business Week Special Report, August 4, 2008 Methvin, Dave, “S3 Failure Isn’t The First-And Won’t Be Last” Information Week, July 28, 2008 Montabano, Elisabeth, “Report: Cloud computing poised for enterprise adoption” August 11, 2008 Perez Juan Carlos and Kirk, Jeremy, “Yahoo, Intel and HP Form Cloud Computing Labs” CIO, July 29, 2008 Schwartz, Ephraim, “The Dangers of Cloud Computing” July 07, 2008 CIO Magazine Sheelvant, Ray, “Is Cloud Computing Feasible?” IT Strategy Blog, March 31, 2008 Trovedo, Gunjan, “Demystifying Cloud Computing” CIO, July 28, 2008 Michael Davis 10

Cloud Computing - An Emerging Technology i King, Rachel, “How Cloud Computing is Changing the World” Business Week (August 4, 2008) p2 ii Snyder, Bill “Cloud Computing: Tales from the Front” CIO (March 5, 2008) p2 iii Montalbano, Elizabeth, “Report: Cloud computing poised for enterprise adoption” Network World (August 11, 2008) p1 iv King, Rachel, “Cloud Computing: Small Companies Take Flight” Business Week, (August 4, 2008) p1 v King, Rachel, “How Cloud Computing is Changing the World” Business Week (August 4, 2008) p2 vi Schwartz, Ephraim, “The Dangers of Cloud Computing” CIO (July 7, 2008) p1 vii Brandon, John “What does Cloud Computing Mean for You” PC Magazine (June 23, 2008) p1 Michael Davis 11

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